Preventing Fraud - Essay

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What do we mean when we think of Check Fraud? It’s one of the largest challenges that are facing most businesses and financial institutions. This is due to counterfeiting through desktop publishing and copying to create or duplicate a check. There are several types of check fraud, they are; forgery, counterfeiting and alteration, paperhanging, check kiting. Forgery is when an employee issues a check without proper authorization. Counterfeiting is fabricating a check while Alteration refers to using chemicals and solvents such as acetone, brake fluid and bleach to remove or modify information on a check. Paperhanging is writing or ordering checks on closed accounts. Check Kiting is opening accounts at two or more locations and using “the float time” of available funds to create fraudulent balances.
When it comes to internal control within the accounting role, having a segregation of duties is very important to keep this internal control in force. The person who is generating the checks within the accounting department is not the same person who will be signing the checks. The person who is usually the signer would be the Controller of the company, the President, or whoever is appointed to take over this function of signing checks. This segregation of these duties works well if the check signer is providing all the necessary documents such as invoices in which these checks are being processed. The Internal Control Systems are rules and regulations in which the company uses to confirm its financial reports are reliable, its operations are effective and efficient, and that it complies with the applicable laws.
To prevent fraud and only pay what is needed by any company, the check signer should confirm any backup document such as an invoice and make sure the check is written out to correctly. Some of the things to look out for are making sure the amounts agree, the vendor name agrees, do the amounts agree to any purchase orders or items purchased on accounts. If the invoice is for a service, does the amount agree to any contracts that may relate to the service and does it clearly state the services it is being provided. Are the expense reports being submitted and paid have the original receipts to support the expense reimbursement. Do the expense reimbursements charges look reasonable and were they properly...

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